CFPB Debt Collection Town Hall Meeting Discussion on the
Pending Debt Collection Rulemaking!
Will changes to regulations governing debt collection increase or weaken protections for consumers? PCDC Program Manager Ping Lee attended Consumer Financial Protection Bureau’s (CFPB) Debt Collection Town Hall Meeting, which was held in Philadelphia. A panel of experts representing consumers and collection professionals talked about the rules governing how debt collectors contact and communicate with consumers. The CFPB is a government agency established to protect consumers from unfair, deceptive, or abusive practices and issued.
The CFPB proposed the following rules on the debt collection practices, which requires final approval after reviewing comments from the public.
1) In general, limit debt collectors to no more than seven attempts by telephone per week to reach a consumer about a specific debt; once a conversation takes place, the debt collector must wait at least one week before calling again;
2) Require debt collectors to send consumers a disclosure with information about the debt and explain protections for the consumer;
3) Clarify the debt collector’s use of new technology to communicate with consumers including providing required disclosures. Consumers can be protected by limiting the ability of debt collectors to use certain technology; and
4) Prohibit the debt collector from suing or threatening to sue a consumer to collect a debt if the debt collector knows that the time period to sue the consumer has passed.
Both consumer advocates and collection professionals criticized the proposal at the town hall meeting. Debt collection professionals disagreed with the “one size fits all” rules on communicating with consumers. They offered several arguments for their criticism: 1) the response rate of consumers are different; 2) the age of outstanding debt varies; 3) the proposal needs to address consumers who want to pay; and 4) legitimate collectors utilize a wide array of approaches to resolving debts.
Consumer advocates largely viewed the rulemaking as a missed opportunity to protect consumers and offered the following criticisms: 1) the proposal allowed too much communication; 2)the implicit disclosure of debts to third parties should not be allowed; 3) debt collectors should be required to obtain consumer consent before using technology such as hyperlink electronic communications, because not all consumers can access information through that medium; and 4) consumer protections are weakened regarding the collection of time-barred debt. Consumer advocates also generally criticized the CFPB for dropping 2016 proposals, including a statement of rights and specific information about what will happen with a debt after the initial 30-day dispute period has passed.
The proposed rule can be found at: https://files.consumerfinance.gov/f/documents/cfpb_debt-collection-NPRM.pdf. The public is invited to submit written comments on the proposed rule by August 19th, 2019. Comment can be submitted in the Federal Register: https://www.federalregister.gov/documents/2019/05/21/2019-09665/debt-collection-practices-regulation-f.
This was an eye opening experience for Ping. There are so many regulations and rules to protect consumers from debt collectors, but consumers do not know their rights. PCDC is bringing legal professionals from Community Legal Services (CLS) to share their knowledge at a legal panel at our annual EXPO event on Saturday June 1st.